A crucial presidential election is just 19 months away. The Democrat's nominee will emerge in a little over 10 months. Most Americans care most about the economy -- and if you hadn't noticed, it's lousy. In the last three months alone, over a half million jobs have disappeared. It's the worst record of month-to-month job losses in almost sixty years.
Bill Clinton presided over the longest recovery in American history. And whether or not it's George W. Bush's fault, he's presiding over one of longest recessions.
So why can't Democrats get traction? Mainly because there's no clear Democraticmessage for what to do about it. Some Democrats want to reduce the budget deficit. Others want to cut paytoll taxes temporarily to stimulate the economy.
Or extend unemployment insurance benefits. Senate Democrats recently unveiled aplan that would give every working family $300 worth of tax credits plus another $300 for each of the first two children, and about $40 billion of aid to states. The ten-year tab is $152 billion, far less than the $550 that Bush wants.
Ten months from now, one Democrat will emerge from the pack, presumably with a single message for how to revive the economy. But there's at least a 50 percentchance that the economy will already have revived by then. In truth, presidentsdon't have much control over the business cycle one way or another. How long the economy takes to rebound is mostly a matter of what the Federal Reserve does to interest rates, coupled with events nobody can control directly -- terrorist attacks, Wall-Street scandals, worldwide epidemics.
Bush's proposed tax cut is a big deal, but it has nothing to do with stimulating the economy in the short run. Don't take my word for it. Fed Chair Alan Greenspan and also the non-partisan Congressional Budget Office agree withme. Bush's plan is really about growing the economy over the long run. Its basic thesis is supply-side "trickle-down" economics -- that is, givetax breaks to the the wealthy, and the resulting economic growth will eventually trickle down to everyone else.
The opposing view about how to grow the economy over the long term might be called "bubble-up" economics. Invest in education, job training, andhealth care and Americans will be more productive -- and that extra productivity will grow the economy even faster, and more equitably.
This is the really big, long-term choice confronting us -- not how to get the business cycle to turn upward quicker than otherwise, but how to grow the economy -- trickle down or bubble up. History tells us that trickle down doesn't work. We tried it in the 80s and almost nothing trickled down. Democrats ought to be spreading the gospel of bubble-up economics as loudly as they can.
